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Child care costs can be a quite daunting instance for soon-to-be-parents in the USA. In fact, according to data from The Ascent, more than one-third of parents in the country allot their income to child care costs. Generally, when a child starts to go to daycare, the child care costs range around $284 a week. It’s even a luxury now to resign from a job, as no job means no health insurance coverage. Before entering a company, you might want to ask if your employer offers a dependent care FSA as this might help you lower your taxes.
Child Care Costs in USA: Here’s Dependent Care FSA to Help Soon-To-Be-Parents Prepare. (Photo: ThePennyHoarder)
Child Care Costs: What is Dependent Care FSA?
In terms of healthcare expenses, FSA simply means Flexible Spending Account. Under this account, parents may avail of the dependent care FSA. This will help single or married parents with their child care costs as every year, they can save around $5,000 as long as they can file a joint tax return. Usually, those who want to fund a dependent care FSA must do it before the new calendar year begins.
Child Care Costs: Is it Okay to Apply for Dependent Care FSA Separately?
Note that if you are married and your spouse filed a separate tax return, the child care costs covered under the dependent care FSA will be limited to $2,500.
Child Care Costs: How to Get Qualified for Dependent Care FSA?
In order to use dependent care FSA, parents must present proof or evidence that their child care costs were defrayed by them. A statement from their children’s daycare provider will be acceptable.
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Child Care Costs: Should the Amount in Dependent Care FSA Use in Specific Time?
The funds that will not be used for child care costs within a year will have the amount forfeited.
Child Care Costs: If a Family Has Three Children, Does it Mean $15,000?
Remember that this certain balance applies per household and not per child.
Child Care Costs: Does Dependent Care FSA Lower the Child Care Costs?
Dependent care FSA does not lower child care costs, however, you may reduce your taxable income which means lowering the taxes you owe. For instance, if you sign up for a $5,000 plan, with a 22% tax bracket, then FSA will make you save up to $1,100.
